Baskadia

Every arbitration begins with the same story: two parties entered into an agreement, something went wrong, and a tribunal must resolve the dispute. But tribunals do not decide cases in a vacuum — they are guided by the governing law. In the UAE, for more than four decades, that law was Federal Law No. 5 of 1985, the Civil Transactions Law, which quietly underpinned virtually every arbitral award governed by UAE law.

The challenge was its age. Enacted long before the internet, digital commerce and globalisation transformed business, the 1985 code increasingly struggled to reflect modern commercial realities. Arbitrators experienced these shortcomings first-hand. Construction contracts were largely left to judicial discretion, often producing inconsistent outcomes. Article 390, governing liquidated damages, gave judges and arbitrators broad authority to adjust agreed compensation to reflect actual loss, reducing carefully negotiated contractual provisions to little more than guidelines. Conduct during pre-contract negotiations also remained legally uncertain. In effect, sophisticated international parties choosing UAE arbitration were relying on a legal framework older than many of the lawyers applying it.

for more, visit : https://thelawreporters.com/uae-civil-transactions-law-arbitration-impact